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Buckets of Money. What is “Buckets of Money”? A conservative growth oriented strategy that hopefully will allow you to: Live comfortably Sleep well at.

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Presentation on theme: "Buckets of Money. What is “Buckets of Money”? A conservative growth oriented strategy that hopefully will allow you to: Live comfortably Sleep well at."— Presentation transcript:

1 Buckets of Money

2 What is “Buckets of Money”? A conservative growth oriented strategy that hopefully will allow you to: Live comfortably Sleep well at night knowing you will never run out of money

3 The Buckets of Money objective To avoid running out of money before you run out of time

4 Advantages of Buckets of Money Safe - no investment risk – only guarantees Simplicity Proven Tames the twin demons – taxes and inflation Flexible – modify Buckets program as your situation changes Probate free transfer to your beneficiaries Private Purposeful

5 How it works... Bucket # 1Bucket # 2 Bucket # 3 Each Bucket is invested in a different way

6 Bucket #1 Safe - low growth vehicle Consistent, guaranteed tax favored income Principal and interest will be depleted over a number of years Meanwhile bucket #2 is growing...

7 Bucket #2 More safe income and an inflation hedge But a better return After Bucket #1 is empty, you pour money from Bucket #2 into Bucket #1 for yet another specified period of years

8 Bucket #3 Long term growth After Bucket #1 is empty, you pour money from Bucket #3 into Bucket #1 for yet another specified period of years Typically Bucket #3 will not be used for 14 to 16 years

9 A Quick Review Bucket #1 Short Term Income for 7-8 Years Pour into Bucket #1 When empty. More income with inflation hedge Long term growth years Bucket #2 Intermediate Bucket #3 Long Term

10 Step 1 – How much to put into bucket #1? Desired Monthly Income? Multiply x 12 7 Year Factor = 6.45 Example Income $10,000 per month $120,000 per year $120,000 x 6.45 = $774,000

11 Step 2 – How much to put into bucket #2? Current annual income needs Multiply by inflation rate factor 3% % % Multiply this number by 6.45 = Funds needed for Bucket #2

12 Step 2 – How much to put into bucket #2? Example – income $120,000 X 4% inflation factor (1.3159) = $157,908 bucket #2 income $157,908 x 6.45 = $1,018,506 $800,000 in bucket #2 earning 3.5% will grow to $1,018,506 in 7 years

13 Step 3 – How much to put into bucket #3? Funds not allocated to Buckets #1 or #2 go into Bucket #3 You’ll be 14 years older Bucket #3 will have 14 years of long term growth before being poured back into bucket #1

14 Buckets of Money Bucket #1 $3,500 per month for 7 yrs 91% Income Tax Free Deposit $268,965 7 Year Certain Immediate annuity More income with inflation hedge. $233,562 grows to $307,352 in 7 years at an average rate of 4.00%. This will pay you $4,000 per month for 7 more years when bucket #1 is empty. Long term growth – bucket #3 not needed for 14 years. $197,473 goes into bucket #3 and in 15 years grow to 6.38% Bucket #3 Longer Term Bucket #2 Intermediate Term Not needed until bucket #1 is empty

15 Buckets of Money A smart, yet conservative, way to protect-and grow- your nest egg


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